1. Outdoors Adventure Inc. manufactures hiking backpacks with thefollowing standard cost structure:
STANDARD COST SHEET: HIKING BACKPACKS
Metal tubing
Leather
Padding
Direct labor
6 meters @ RM3/meter
2 square meters @ RM7/sq. meters
3 kilograms @ RM4/kilogram
4 hours @ RM15/hour
RM18.00
14.00
12.00
60.00
Total standardcost RM104.00
During December 2016, 500 backpackswere manufactured and the following costs incurred:
ACTUAL COST INCURRED FOR DECEMBER 2016: HIKING BACKPACKS
Metal tubing
Leather
Padding
Direct labor
3,100 meters
1,100 square meters
1,600 kilograms
1,800 hours
RM 9,455
7,722
6,560
27,270
Totalcost RM 51,007
Required:
a. Calculate the material price variance, material usage variance,labor rate variance and labor efficiency variance. Note that formaterial variance, there are three (3) materials used in theproduction of the backpacks. You have to calculate the variancesfor each material and then the total for material variance.
b. Writea short report summarizing and analyzing the manufacturingoperations of Outdoor Adventures Inc. for the month of December2016.
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